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Nvidia and Alphabet are both benefiting from the artificial intelligence (AI) boom.
Pinterest stock is cheap and is using AI to help drive growth.
Toast continues to grow rapidly, while e.l.f. Beauty has one of the best growth setups in the consumer space.
Growth stocks continued to lead the market higher and remain a great place to invest. If you have money on the sidelines you're looking to invest, here are five growth stocks you can invest $1,000 in each to start a nice growth-focused portfolio.
Image source: Getty Images.
Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue »
The biggest beneficiary of the artificial intelligence (AI) buildout, Nvidia (NASDAQ: NVDA), continues to have a long runway of growth in front of it.
AI data center spending continues to ramp up, and Nvidia's graphics processing units (GPUs) remain the main chips used to power AI workloads. It has been able to garner around a 90% market share in the GPU space, as its CUDA software platform and NVLink interconnect system help provide a wide moat, particularly with large language model (LLM) training.
As the one AI data center operator not beholden to Nvidia, Alphabet (NASDAQ: GOOGL) (NASDAQ: GOOG) has given itself a big advantage in the AI race. The company has the most complete AI tech stack, owning its own custom AI chips that it uses to train its leading LLM Gemini.
Gemini is now infused throughout its products, including Google Search, which is leading to solid query and revenue increases. Meanwhile, its cloud computing unit, Google Cloud, is seeing rapid revenue growth (up 34% last quarter) and huge operating leverage. With customers now looking to use its Tensor Processing Units (TPUs) to run some of their own AI workloads, Alphabet's AI growth is just beginning.
A cheap stock (a forward price-to-earnings (P/E) ratio of around 12.5) with strong revenue growth (17% last quarter), Pinterest (NYSE: PINS) is an attractive stock to buy right now. The company has been an under-the-radar AI winner, transforming itself from simply an online vision board to an AI-powered discovery shopping platform, where its visual search capabilities can recognize items in a photo and provide shopping links directly to them.
At the same time, its Performance+ suite is helping advertisers create better campaigns, improve targeting, and even identify users with a high intent to purchase so they can bid more aggressively and help improve conversions.
Toast (NYSE: TOST) remains one of the preeminent growth stories in the software-as-a-service (SaaS) space. The company has become a valuable partner to small- and midsized restaurant operators, with its software suite helping power their entire operations. Meanwhile, it benefits from its customers' success through its payment processing system, which has a lower take-rate than many other large competitors.
The company has been seeing strong growth, with its annual recurring revenue (ARR) -- which consists of its subscription revenue and payment processing gross profits annualized for the full year -- jumping 30% last quarter, while the number of new locations using its solution climbed 23%. Toast still has plenty of growth ahead, as it expands into adjacent markets like large chains and into international markets.
Moving away from tech, e.l.f. Beauty (NYSE: ELF) has one of the most intriguing growth setups in the consumer space. The company has taken share and gained considerable shelf space in the mass-market cosmetics space with its namesake brand over the years. It still has a solid runway here, especially as it continues to expand internationally.
However, its biggest growth driver in the coming years should come from the Rhode brand, which it recently acquired. Rhode is a fast-growing premium skincare brand founded by Hailey Bieber that managed to grow to over $200 million in sales in less than three years, with only a handful of products sold on its website and little paid marketing.
The brand recently launched in LVMH's Sephora, and e.l.f. will have a huge opportunity to increase Rhode's distribution, product assortment, and brand awareness in the coming years to help drive growth.
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Geoffrey Seiler has positions in Alphabet, LVMH Moët Hennessy - Louis Vuitton, Pinterest, Toast, and e.l.f. Beauty. The Motley Fool has positions in and recommends Alphabet, Nvidia, Pinterest, Toast, and e.l.f. Beauty. The Motley Fool has a disclosure policy.
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